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Exam 12: Perfect Competition and the Supply Curve

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Question 141

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Use the following to answer questions : Figure: A Perfectly Competitive Firm in the Short Run -(Figure: A Perfectly Competitive Firm in the Short Run) Use Figure: A Perfectly Competitive Firm in the Short Run.The firm will shut down in the short run if the price falls below:

A) G.
B) F.
C) E.
D) P.

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Question 142

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Use the following to answer questions : Figure: The Perfectly Competitive Firm -In a long-run equilibrium,economic profits in a perfectly competitive industry are:

A) positive.
B) zero.
C) negative.
D) indeterminate.

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Question 143

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A perfectly competitive small organic farm produces 1 000 cauliflower heads in the short run.At this quantity,ATC = $6 and AFC = $2.The market price is $3 per head and is equal to MC.To maximize profits or minimize losses,this farm should:

Use the following to answer questions : -(Figure: The Perfectly Competitive Firm II) Use Figure: The Perfectly Competitive Firm II.If this firm's MR curve is MR₁,the firm will maximize profit by producing _____ units of output,and its economic profit will be _____.

According to the optimal output rule,profits are maximized when firms produce where the difference between marginal revenue and marginal cost is the largest.

Use the following to answer questions : $\begin{array}{l}\text { Table: Total Cost and Output }\\\begin{array} { l c } \hline \text { Output } & \text { Total Cost } \\\hline 0 & \$ 10 \\1 & 60 \\2 & 80 \\3 & 110 \\4 & 170 \\5 & 245 \\\hline\end{array}\end{array}$ -(Table: Total Cost and Output) Use Table: Total Cost and Output,which describes Sergei's total costs for his perfectly competitive all-natural ice cream firm.If the market price of a tub of ice cream is $67.50,how much is Sergei's total cost at the profit-maximizing output?

The LOWEST point on a perfectly competitive firm's short-run supply curve corresponds to the minimum point on the _____ curve.

Use the following to answer questions : Figure: The Marginal Decision Rule -(Figure: The Marginal Decision Rule) Use Figure: The Marginal Decision Rule.At q₂,or the _____,the _____ price is equal to marginal cost.

In the short run,if a perfectly competitive firm chooses to produce,then its profits are maximized by producing the quantity of output where marginal cost equals marginal revenue.

The equilibrium price of a guidebook is $35 in the perfectly competitive guidebook industry.Our firm produces 10 000 guidebooks for an average total cost of $38,a marginal cost of $30,and an average variable cost of $30.Our firm,in the short run,should:

Suppose that the market for haircuts in a community is a perfectly competitive constant-cost industry and that the market is initially in long-run equilibrium.Subsequently,an increase in population increases the demand for haircuts.In the long run,firms will _____ the market,driving the price of haircuts _____ and the profits of individual firms _____.

For a perfectly competitive firm in the short run,if the firm produces the quantity at which _____,the firm _____.

Use the following to answer questions : Figure: Revenues,Costs,and Profits for Tomato Producers III -(Figure: Revenues,Costs,and Profits for Tomato Producers III) Use Figure: Revenues,Costs,and Profits for Tomato Producers III.The market for tomatoes is perfectly competitive.If market price of a kilogram of tomatoes is $18,in the short run,the farmer's profit-maximizing output is _____ kilograms.

Suppose economic profits exist in perfect competition in the short run.Firms will enter in the long run because of easy entry,the short-run market _____ curve will shift to the right,and _____ will _____.

For a firm producing at any level of output LOWER than the most profitable one,an increase in output adds:

Use the following to answer questions : $\begin{array}{l}\text { Table: Variable Costs for Lawns }\\\begin{array} { c c } \hline \begin{array} { c } \text { Quantity } \\\text { of Lawns }\end{array} & \text { Variable Costs } \\\hline 0 & \$ 0 \\10 & 100 \\20 & 300 \\30 & 500 \\40 & 1,100 \\50 & 1,800 \\60 & 2,900 \\\hline\end{array}\end{array}$ -(Table: Variable Costs for Lawns) Use Table: Variable Costs for Lawns.During the summer,Alex runs a lawn-mowing service,and lawn-mowing is a perfectly competitive industry.Assume that costs are constant in each interval;so,for example,the marginal cost of mowing each of the lawns from 1 through 10 is $10.Also assume that he can only mow the quantities of lawn given in the table (and not numbers in between) .His only fixed cost is $1 000 for the mower.His variable costs include fuel,his time,and mower parts.If the price for mowing a lawn is $60,how much is Alex's total revenue at the profit-maximizing output?

In the short run,if P > ATC,a perfectly competitive firm:

Consider a perfectly competitive firm in the short run.Assume that it is sustaining economic losses but continues to produce at the profit-maximizing (loss-minimizing) output.Which statement is FALSE?

The short-run industry supply curve is the sum of the individual supply curves of all of the firms in the industry,given a fixed number of firms.

Use the following to answer questions : $\begin{array}{l}\text { Table: Variable Costs for Lawns }\\\begin{array} { c c } \hline \begin{array} { c } \text { Quantity } \\\text { of Lawns }\end{array} & \text { Variable Costs } \\\hline 0 & \$ 0 \\10 & 100 \\20 & 300 \\30 & 500 \\40 & 1,100 \\50 & 1,800 \\60 & 2,900 \\\hline\end{array}\end{array}$ -(Table: Variable Costs for Lawns) Use Table: Variable Costs for Lawns.During the summer,Alex runs a lawn-mowing service,and lawn-mowing is a perfectly competitive industry.Assume that costs are constant in each interval;so,for example,the marginal cost of mowing each of the lawns from 1 through 10 is $10.Also assume that he can only mow the quantities of lawn given in the table (and not numbers in between) .His only fixed cost is $1 000 for the mower.His variable costs include fuel,his time,and mower parts.If the price for mowing a lawn is $60,how much is Alex's total cost at the profit-maximizing output?